Toronto

Nice but broke

Canada's aspiring city state

THE mayor of Toronto, David Miller, has ambitions to turn Canada's largest metropolitan area into a city state. Earlier this year he persuaded Ontario's government to grant Toronto more powers to raise money and govern itself than other cities. But his first attempt to use those powers has backfired. This month city councillors refused to approve new taxes on home sales and vehicle registration. The catcalls of estate agents, who crowded the council chamber on the morning of the vote, clearly rang louder in some councillors' ears than the mayor's urgings.

This comes at a delicate time for Toronto, a city of 2.5m. It is lauded for its cosmopolitan feel and quality of life. But it also suffers from budget problems and creaking infrastructure just when—for the first time in a century—its status as Canada's pre-eminent city is being challenged. The contender is Calgary, in Alberta, the western base of the country's booming energy industry. Though its population is only 1m, it is growing fast. Calgary is building new schools, hospitals and roads and luring corporate head offices.

In contrast, Toronto's economy is under pressure. Its manufacturing industry shed 100,000 jobs in the past five years, because of a strong currency and competition from China. Not all the news is grim. The Toronto area still attracts two of every five immigrants to Canada. Private wealth is pouring into new museums, theatres and art galleries. And Toronto is still Canada's financial centre. Yet few would now describe it as “New York run by the Swiss”, as did Peter Ustinov, a British actor and writer, in a double-edged quip in 1987.

Toronto's prospects turn in part on sorting out its finances. It faces a deficit of about C$575m ($550m) this year on current spending of C$7.8 billion. The problems date from the 1990s, when the federal government eliminated its own deficit partly by cutting funding to provinces. Ontario responded by passing responsibility for social housing, welfare and other social programmes to the cities, which struggled to pay for them out of property taxes.

Mr Miller wants the province to give him more money while taking back some social programmes. He promises to try again to get the tax increases approved in October. Defeat then would mean cuts in spending on public transport and policing, he warns. Toronto has also formed a common front with other cities to push the federal government to hand over one of every six cents raised by the federal sales tax (which Mr Miller reckons would give his city an extra C$410m). “One Cent NOW!” clamour large green signs across the city.

The city's case for even more autonomy would, however, be boosted if Mr Miller made more effective use of the powers he already has. Road tolls or a congestion charge stand a better chance of winning approval than his current tax proposals, reckons Tom Courchene, an economist at Queen's University. They would reduce pollution and congestion, and scoop up money from out-of-city commuters.

As well as money, Toronto lacks some of the animal spirits that are making Calgary roar. While the estate agents rule in Toronto, Albertans are more ambitious. Just as Montreal was once Canada's financial centre before Toronto took over, so the banks could move further west to Calgary, says Joe Martin, a business historian. Splendid to be a city state. But even Venice ended up as a backwater.